Treasurer Scott Morrison calls in the banks amid backbench push for royal commission

Coalition Senator defying the PM Nationals senator Barry O'Sullivan plans to put forward legislation for an inquiry into the banks, going against government policy and says he has the support of colleagues.

Mr Maxsted said he expected to discuss a "relatively narrow piece of reform agenda that the government has in mind" in his meeting with the Treasurer.

The meetings come as pressure mounts in cabinet over the prospect of a royal commission, with a cabinet leak revealing on Wednesday that the Turnbull government considered reversing its opposition to one in the face of building backbench concerns.

Treasurer Scott Morrison: "For some years now I've been talking to the banks about resolving some legacy cases where people have had issues." Photo: Alex Ellinghausen

Foreign Minister Julie Bishop called for a formal investigation into the leak on Thursday, but Mr Morrison would not be drawn. "I think it's incredibly important these issues are resolved and I'm sure the Prime Minister has this well in hand," he said.

The country's biggest banks including Westpac, ANZ, National Australia Bank and the Commonwealth Bank have reportedly been bolstering their legal teams. Photo: Arsineh Houspian

The move would require the support of up to four Coalition MPs to cross the floor in the House of Representatives to establish an equally powerful parliamentary commission of inquiry, which could destabilise the Turnbull government.

"If both houses of the parliament think this is a good thing to do and that is the decision, I think the Prime Minister has to sort of sit up and take note and support the parliamentary decision," Senator O'Sullivan said on Monday.

I think it's incredibly important these issues are resolved and I'm sure the Prime Minister has this well in hand.

Scott Morrison

His office has become a de-facto complaints centre for aggrieved customers following a catalogue of scandals, including the financial planning arm of the Commonwealth Bank and its CommInsure life insurance branch.

The country's biggest banks, including Westpac, ANZ, National Australia Bank and the Commonwealth Bank, have reportedly been bolstering their legal teams in preparation for a high-powered inquiry.

Foreign Minister Julie Bishop has called for a formal investigation into the leak on Thursday, but Treasurer Scott Morrison would not be drawn.

She said the scandals identified by Senator O'Sullivan in financial planning and insurance had been "dealt with".

"Banks have been subject to some 20 inquiries, including three parliamentary inquiries that are currently active. But if they decide that there should be another one, banks of course will co-operate, as they have with every other review by regulators or parliamentary inquiries," she said.